Re-evaluating Your Soap and Cosmetic Business

If you are a handmade soap and cosmetic product maker who is in the process of re-evaluating your business you're not alone. There are a lot of business owners re-evaluating their businesses this year. It's a common situation for small business owners - and if you are finding yourself in this predicament know that you are not alone. 

Some small business owners are dealing with life challenges and unsure how or whether to keep their business afloat. Others are unaware of their business’ profitability and coming to terms with getting honest and real about financials or closing their doors. You might know someone going through something similar right now. Or that person might be you.

Just to be clear, I’m not referring to everyday challenges that are part of being an entrepreneur. I’m talking about life challenges that rattle you to the core and stop you dead in your tracks. These struggles might be with family members, health matters, personal finances, blinders on business finances and/or a business that no longer serving you and your needs.

I went through my own personal struggles back in 2001 when I was a divorced, single mom trying to keep my business afloat. There were days when I didn’t know if I should give up or continue the fight. But re-evaluating my business and pinpointing my strategies helped me made decisions to reshape my life and business.

For some entrepreneurs, the choice to close a business is the right move. Every situation is different. My challenges brought out the fighter in me. Either way, there is no wrong answer – only the right answer for you.

Re-evaluating

I was recently talking with another entrepreneur and she made an interesting point of how many people launch a business for one reason – because it fits into their current lifestyle and vision for the future. But when vision and/or lifestyle change, there becomes a need for personal assessment to evaluate whether the business still fits into the plan. Her point may sound obvious, but I think we all need to hear it over and over again. Ask yourself “Is my business serving my needs and my dreams?” It make take some time for the truth to reveal itself. Be honest.

Let’s look at some reasons you may have started your business. We’ll call this the “then” moment:

• Drawn to Entrepreneurship
• Flexible Hours
• Convenience of Working from Home
• New Business Replaced a Lost Job
• Extra Income
• Sole Income
• Enjoying Creativity and Making Product

 Now let’s look at common curveballs that could change the way your business is no longer working for you. I’m not implying that these are the sole reason(s) to quit your business. More on this in a moment. We’ll call this the “now” moment. 

Are any of these going on in your life:

• Hobby Turned to Business – Now What?
• Financial Problems
• Divorce
• Death of Loved One
• Aging Parents Who Need More of Your Time
• Children Who Need More of Your Time
• Forced to Move/Loss of Workspace
• Layoff from Primary Job/Income
• Not Sure If Your Business is Profitable
• Other Opportunities Are Beckoning You

Determining the distance between “then” and “now”:

• Does the reason you started your business still resonate?
•  What has changed between the “then” and “now”? How big is the gap?
• Are there other opportunities that excite you more than your soap business?
• Can those opportunities be combined with your soap business?
• Does your business no longer serve you?
•  Is your business no longer profitable? 

Next, ask yourself what solution(s) can you put in place to help you keep your business? 

Does it make sense to put these solutions in place vs. closing your business? 

This may not be a quick answer, but hopefully it will start a thought process within you to gain insight into whether you should move forward in your business or think about new opportunities instead.

Look to Strategy for Simpler Problems

Sometimes problems that seem insurmountable can be easily fixed. For example, if you need more time in your life, perhaps you are trying to do too much yourself. Can you afford to hire employees? If you’re not sure about your business’ finances and bottom line then that’s an easy fix. You need to hire an accountant or learn Quickbooks to determine the profitability of your business – sooner than later. Or perhaps you’re burned out? Get clear on your reason for burnout by taking a few days off and getting away for a fresh approach. Determine what is causing burnout. Boredom? Overworking? Reach out to a mentor to give you insight in how you can change up your outlook and business operations.

Often it is too easy to think about the “right-now” aspect of our business, because we only see the results immediately in front of us. But what about the big picture? Do you have that big picture for your business as well as long-term goals?

Spend time for a few days envisioning what you want for your business. Where would you like to take it? What is your plan from taking it from here to there? Set goals and then develop an action plan to turn them into reality.

Advice on Moving Forward

If your wounds are new (such as divorce or death) it may be time to put your business on hold to care for yourself or a family member. Maybe you’ve already come to terms with closing your business, but open to starting a new venture either at a later time.

For some soapmakers, talking about your business challenges to a mentor is all you need to get you and your business back on track. Be sure to consult with those who are in the industry or have solid business background and are themselves successful, not someone just giving lip service. When you ask for advice, listen. Be open to constructive criticism that can ultimately lead your business to success.

Lastly, put your ego aside to make decisions about your business. Forget what others might think. Forget how it all “might look.” This is about being honest about how your business is affecting the quality of your life. Closing a business is not about failure. It’s about making a decision that is right for you. Most importantly, it’s not a an end, it’s the beginning of new dreams, opportunities and ventures.

What are ways you have re-evaluated your business? What decisions and actions did you find helpful?

Understanding Suggested Essential Oil & Fragrance Guidelines in Soap and Cosmetics

One question I get asked repeatedly is how to determine the safe amount of essential oil or fragrance to use when formulating soaps and cosmetics. I hope to shed some light on this subject. There are layers and layers of information on this subject, and I am merely peeling back the first layer in this blogpost.

There is not a simple answer such as 2% in leave-on skincare products and 5% in bar and liquid soaps. Why? Because there are essential oils that are known for skin sensitivity issues that need to be taken into account. So a  quick and easy answer is that we cannot assume that we can use up to 5% of one type of fragrance oil or essential oil as part of the scent component in our recipe or formula if it is known to cause sensitivity issues.

If we are using an essential oil such as cinnamon bark, for example, it is not recommended that we use it as the full amount of our fragrance component. There are voluntary guidelines for percentages in usage levels set in place by International Fragrance Association (IFRA), an industry organization which provides voluntary guidelines regarding the use of fragrance.  These are known in the industry as IFRA Application Guidelines.

A handful of industry essential oil and fragrance suppliers provide IFRA guidelines on their websites along with suggested usage rates in soap, cream, lotions, shampoos and any product that can be formulated using a fragrance. Call your supplier if they do not list recommendations to find out and tell them that you are asking because you want to make safe products for your customers.

There are three main reactions that can occur as a result from essential oils being applied to the skin:

• irritation
• sensitization
• photosensitization

Cinnamon bark essential oil, for example, has been on IFRA’s Restricted Essential Oils list along with expressed citrus oils (“expressed” is a method of essential oil distillation) such as bergamot, bitter orange, grapefruit, lemon and lime.

“Fragrance is the second most common cause of skin allergy, after nickel. However ‘fragrance’ is not a single substance; it is a term that encompasses thousands of chemicals and hundreds of essential oils.” Robert Tisserand, Essential Oil Safety Second Edition. Book link: http://roberttisserand.com/essential-oil-safety-book-second-edition/
 
Now, let’s back up and review the two types of fragrances we’re talking about so that any newcomers can follow this conversation. The first is essential oils, commonly referred to as EOs. Essential oils add fragrance to your product, as well as add therapeutic benefits to the body and mind. We can’t make therapeutic claims, but can make cosmetic or hygiene claims. So we can’t mention skin problems such as acne or psoriasis, but we can refer to essential oils being known to having properties such as antifungal, antimicrobial, as well as intended for oily skin, and so on.

Second, essential oils are different from man-made, synthetic fragrance oils, which are commonly referred to as FOs. If you choose to use fragrance oils, make sure they are skin safe. For example, you would not want to purchase a fragrance intended solely for candlemaking and use it in skincare products since it is not for use in leave-on or wash-off products.

Now that’s we’ve cleared the air (pun intended) about different types of fragrance, let’s get into guidelines about recommended usage rates. This is the percentage (not type of) essential oil or fragrance oil you’ll use in soaps and bath and body products.

                 

Typically, fragrance usage rates in leave-on products such as creams and lotions are lower than wash-off products (bar soap, liquid soap, etc.). More of a leave-on product remains on the skin versus a wash-off product, so the amount of fragrance should be lower. The average recommended usage rate of fragrance is one to five percent for any product sold or marketed to ages one and up. Again, we cannot assume one fragrance or another can be used up to 5% - we need to research to confirm information from the manufacturer or supplier. (Off Topic Tip: I never recommend any fragrance for newborn through 12 months of age. Their little bodies are so sensitive and have a hard time processing fragrance unlike adults.)

Any recommended percentage relates to the total weight of your recipe. For example, for a 100 oz. weight batch of cream, 1% dilution rate would equal 1 oz. or for 2% a total of 2 oz. of essential oil would be used (100 oz. x .01 = 1 oz. or 100 oz. x .02 = 2 oz.).

 

If our research shows that the essential oil (or fragrance oil) we wish to use has a suggested usage rate of 3%, but we would like to fragrance at 5%, then a solution would be to blend it with another oil.

If you are selling products to a healthy adult market (i.e., one that is not going through chemo, radiation nor sensitive to fragrances) most likely you’ll want to use a two to five percent usage rate. This is a range suggested for healthy adults and children older than 12 years of age. Again, research, to determine the safety levels of the fragrance you are using by familiarizing yourself with IFRA and asking your supplier for information.

If you're interested in studying the effects of essential oils in skincare and cosmetic products in detail, join me in a "live" 2-day seminar with Robert Tisserand on "Essential Oils in Skincare" held April 5-6 , 2014 in Santa Barbara, California and on August 23-24, 2014 in New York City.

What questions do you have regarding essential oils or fragrance oils in soap or cosmetics?

 

The Flipside of Social Media: How Facebook Could Be Stunting Your Soap Business Growth

What if I told you that quite possibly you’re spending around five or six weeks annually on Facebook? Would you think I’m crazy? Are you like me, and in denial about the time you spend on Facebook? You’re not alone – there are many of us soapmakers who need an intervention.

Let’s have a heart-to-heart about the time we spend on Facebook.  Does this sound familiar: You check into Facebook on any given time of the day only to be drawn into a friends’s post, which leads you to another soapmaking page, which then leads you to a soapmaking group. After all, it was just a pretty picture of a soap swirl that caught your eye. You innocently click on the photo and then begin to read the comments. Oh, and look! Under the comments is a question about how much salt to add to a soap recipe. You were wondering that too. Oh, and look! Another pretty photo. One group even has a challenge that you’re considering participating in. Next thing you know, you’ve been on Facebook for 30 minutes and haven’t even posted to your own business page. So much for productivity!

My 19 year old daughter walks by and call me out on it. “Mom, why are you still on Facebook?!” At first I resisted with “Umm, I’m not. I’m just posting to my business page.” But I knew I was in denial. I was checking catching up on comments in soapmaking groups and drooling over soap pictures - things that aren’t adding to my business growth. Sometimes I disappear into what seems like a vortex and then reappear 30 minutes later feeling guilty about what I could have accomplished in that timeframe.

Without a doubt, Facebook can bring in sales to your business. I generate business through my personal and business Facebook accounts. I track my ROI (return on investment) and I know the postings which account for purchases. But I know I spend too much time just browsing, being social and quite frankly, getting sidetracked. Looking in soapmaking groups and at other soapmakers business pages can be inspiring. But falling prey to the “pretty shiny object”  syndrome where you bounce from one post on Facebook to another is a problem. In fact, I would say that for some it could quite possibly be an addiction. Can you survive a day or two without logging into Facebook?

I need to cut back, and I was certain that many of you feel the same way. So I recently posted an informal poll on my Facebook business page and one in a popular Facebook soapers group to see how much time others are spending. Here’s what I found:

1.       Many soapmakers admitted to being signed into Facebook all day long. They would check multiple times per day ranging from “a few minutes” to “30 minutes per session.”

2.       One soapmaker admitted, “I’m logged in 24/7 with my phone. I have no discipline.” While another said plainly, “Too many!”

3.       “I need an intervention,” begged another soaper, who said she even has her home page set to Facebook and that she also stays logged in daily.

4.       Fewer respondents were disciplined. One said, “Two times a day for 15 minutes each.”

5.       A handful of respondents said that they just spend time on Facebook to promote their business.

A 15 minute stint on Facebook is not going to stunt your business growth. But what if you spend 30-minute stints four or five times a day?

Let’s pause for some math:

• You spend 30 minutes on Facebook by logging in five time per day = 2.5 hours per day (Based on conversations and posts, I believe this to be very common)

• 2.5 hours on Facebook 7 days/week = 17.5 hours per week

• 17.5 hours week x 52 weeks/year = 910 hours or a total of 5.4 weeks per year

Think about it. On average we could be spending a whopping total of 910 hours per year on Facebook! That’s five and a half weeks gone. Adios Au Revoir. And we haven’t even begun to discuss time spent on other social media sites such as Twitter, Instagram or Pinterest. I don’t know about you, but when I look at it that way there are other ways I would rather be spending that time: with family, with friends, taking care of my health and growing my business.

By decreasing the amount of time you spend on Facebook from 2.5 hours a day to 30 minutes, you will gain: 2 hours a day or 728 hours per year. Imagine adding a month to your life annually!

Now let’s take a look at some areas of your business that are commonly overlooked. What if you applied some of “Facebook time” to these often overlooked business projects: writing your monthly newsletter, writing blog posts, adding search engine optimization to your website, targeting wholesale accounts and building inventory.

Changing Your Facebook Habits

For five days, keep track of how many times you log in to Facebook, and how much time you spend per session. If you stay logged in all day, I suggest that you log out after each session. Keep a notebook and be honest with yourself. Better yet, install a free application called Rescue Time that will track time that you spend weekly on social media. Rescue Time will email a report of your weekly computer-time productivity.

Check out pre-scheduling updates to your Facebook business page using Facebook tools or free tools such as Hootsuite can save time as well. Spend some time scheduling a month’s worth of business posts. It’s much more effective and productive to organize your posts in advance rather than post them “on-the-fly” daily.

Need Facebook for soapmaking community support? We all have our favorite groups that support us – and I’m no exception. Believe me, you won’t be missing anything if you check in with your friends twice a day versus five times or more.

If you spending hours per day on Facebook, I recommend you try cutting down to one hour a day for the first week. Log on in the morning for your 15 minute fix. Log out and check back at noon for 15 minutes and then again in the evening for 30 minutes. The second week cut back to 30 minutes a day by logging in twice daily for 15 minutes. If you’re old-fashioned, set an egg timer to help keep track of time. If you’ve got a smart phone use the alarm on it or simply watch the clock.

Hold yourself accountable for Facebook time. If it helps, write down the accomplishments you were able to achieve and the memories you were able to make by spending more time with your kids, family and friends. I’m with you on the journey!

I'd love to hear about the ways you limit your time online and any tips you have to share.

 

Tips to Increase Profitability for Your Handmade Soap and Bath & Body Business

I bet you’re breathing a huge sigh of relief about now. 2013 is a closed chapter and a fresh, new 2014 calendar awaits your business strategy. If you haven’t already reviewed 2013, now is the time to do it. What worked for you last year and what didn’t? Where were you most profitable? Being more selective with opportunities presented to you in 2014 will positively affect your bottom line.

I’ve already let several projects from 2013 fall to the wayside in 2014. They made sense last year, but as I continually raise my business standards and become more selective in where I put my energy there were several things that I’ve let go.

In addition to reviewing 2013, another project on the top of your list should be your annual growth strategy. I don’t know anyone who doesn’t want to grow their business. But let’s get specific. Do you want to grow your business 5%, 10% or more this year?

There are several ways to grow your business. One way is to reduce your bottom line. The other is to increase your sales. Let’s take a look at reducing your bottom line first. A little planning and strategizing could save you a total of 5-30% in this area. Here are some simple suggestions to save money, which in turn will put more back into your bank account:

·         Negotiate lower merchant account credit card processing rates. Did your credit card sales increase this year? Do you expect more sales this year? Call the merchant processing company and tell them you are looking for lower rates. If you reduce your rate by 0.5-1% you’re doing well.

·         Review your annual cost of goods spending and shop around for the best prices on ingredients. This year work on buying in bulk to lower your costs. Instead of purchasing in small quantities frequently, determine price breaks and order quarterly or twice a year instead. This can save you anywhere from 3-5% or more on your cost of goods spending.

·         Re-evaluate contracts, service subscriptions (webhosting, etc.) and memberships. Which of these are worth keeping and which have little to no return on investment? Estimated potential savings here is 1-3%.

·         Review shipping costs from suppliers. Would you save money buying in bulk and shipping your orders via freight versus UPS? You could save up to 10% on current shipping costs depending on your buying habits.

·         Re-evaluate your marketing budget. What did you pay for marketing in 2013? Which of your marketing initiatives resulted in a high return on investment? Which did not?

Let’s look at increasing sales

Have a specific goal in increasing sales (i.e., this year we will increase sales by 20%).  Here are some suggestions on how to increase sales:

·         Nuture relationships with current customers. Your best customers know your brand and will have good suggestions on what products to add, how to improve customer service, new services and more. Tap into their resources and remember to reward them with discounts and paybacks.

·         Upsell to customers. Did you know that more than 80 percent of sales are impulse purchases? This is a relatively easy way to increase sales by 5-10 percent annually. Ask for the sale at checkout (i.e., “Would you like to take advantage of our lip balm special?”)

·         Add new products or services. Be specific. For example, how many new products will you introduce by May? How many by September?

·         Increase your wholesale and private label accounts. How many annually? How many new accounts does that mean per month? Per week?

·         Re-evaluate your retail sales. Which trade shows and retail shows were worth your time last year? Are there new shows you want to try this year?

·         Update your website. There’s always something to improve, from product photography to product descriptions. Add quality search engine optimization and increase your social media interactions.

·         How can you work more efficiently? Distractions lead to wasted time which cut into your bottom line. Schedule your time, limit access to time-wasting websites (use apps such as RescueTime to see how much time you’re spending on Facebook and other sites). If you spend less time on Facebook weekly (five to seven hours per week), what could you accomplish in that timeframe for your business?

·         Disorganization is another efficiency killer. How much time do you waste looking for ingredients or packaging that you were sure was “just right there” but now you have to place a rush order to fill an order? It’s frustrating – I’ve been there! Invest in inventory software. Get your business organized into a mean, lean operating machine.

These are just a few suggestions to get your business ready for a fabulous 2014. Prioritize what makes the most sense for your business. Then begin implementing them as soon as possible. Keep good records so you can track your results. Once 2015 rolls around you’ll be ahead of the game. Happy sales (and savings).

I'd love to hear your tips on increasing profitability. 

Reprinted with permission from the January 2014 Saponifier Magazine, written by Marla Bosworth